Sarah Green column

As we enter the New Year, it is clear that this will be a year of political change.

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As we enter the New Year, it is clear that this will be a year of political change.

The transition to a new Prime Minister and a reinvigorated Conservative party seeking to carve out new political ground will create uncertainty for business in 2007. As UK firms face intensifying global competition, domestic stability is increasingly important.

However the coming period of political change must not hold back moves to improve the UK's international competitiveness.

Business will not be moved by party political grandstanding, but will react positively to initiatives which actually improve the ability of companies to get on with their job.

The relationship between business and politicians is critical as the coming year sees legislation vital to UK competitiveness - ranging from skills to energy security and the planning system - coming before Parliament. This must not be derailed by politicians in pursuit of extra votes by taking a sideswipe at business, however unwitting.

There are key issues to be discussed. The environment has, rightly, raced up the political agenda, and helping to tackle climate change will be centre stage for the CBI. UK companies are committed to playing a full role as part of an international, society-wide effort.

But they need national governments to back market-driven mechanisms, such as carbon trading, to bring change, rather than opt simply for heavy-handed taxes.

The Doha round of world trade talks need to be resolved in 2007 with movement on both sides of the Atlantic to end the impasse, particularly on agricultural subsidies and on foreign market access.

Failure to deliver will jeopardise the chances of developing countries to prosper while causing many to pull back from a global free trade agreement and retreat in damaging national protectionism.

In today's world, where ideas and capital circumnavigate the globe in an instant, a country's attractiveness as a business location can shift very rapidly. Getting the tax and regulatory environment right has never been more critical.

Politicians of all hues must beware of unwittingly wrapping firms up in a straitjacket of regulation. Companies need freedom to flourish and to create wealth and prosperity. The autumn has seen a new flurry of deregulatory promises - 2007 needs to be the year when the promises are finally delivered.